One of the main questions that is common among budding property investors—the all too familiar clashing of investment goals and personal considerations. While both are important, there are completely different mindsets required to deal with them.
Do not confuse knowing your city neighbourhood, where you live and where you’ve grown up, with knowing a market because they are two completely different things. Living in a suburb means you know the social amenities and the busy roads … but that’s largely irrelevant if the outlook of that broader city is not particularly good—there are two different mindsets required there. You need to have an investor mindset and also see property as a financial instrument.
Investing in properties is obviously a big decision to make as it entails risks that are quite costly for most people. Someone who’s only beginning to dip their toe in the business of creating wealth through property, must already start thinking about his ideal ending.
All big decisions, plan with an end in mind. So, what is the end in mind? The end would surely be “you’re contemplating investing in property because years down the track, you don’t want to be strapped to a government-funded pension which isn’t going to provide much of a lifestyle.”
“Is buying a property in your local suburb going to help you do that?” That will be based wholly and solely on your personal requirements and emotion. On the other hand, when you take a critical look at this massive country called Australia where there’s a lot more opportunities, will one of those opportunities be better for you?
While your local city suburb may appeal too many because of its amenities official statistics from a 15-year period shows that some regional suburbs actually give a better total return on investment. An example of this is Narrabri, a suburb a lot of people may not have heard of, which is located in northern New South Wales, it turns out to be a better place for property investment compared to the better-known Bondi—a dollar for dollar return on investment.
“Everyone’s heard of Bondi and they’re like … ‘I would want to live there, so what a great investment,’ but in a rural community like Narrabri, you actually would have made significantly more money.”
At the end of the day, a property investor does well to remember that as someone whose desire it is to build wealth, must be able to distinguish the huge difference between demand and desire. Wanting to buy a property solely because you personally liked its location as, perhaps, a holiday getaway is a risky strategy to use.
The reality is plenty of people want to live in Bondi but not many do because they can’t afford it or they don’t actually work near there.
The final advice: Continue educating yourself and share your knowledge with your parents/educated colleagues so you can make smarter financial decisions together.
There’s may be better potentially investible locations or assets outside of your local city area where, it might, for the same money, get you into multiple markets that are all going to go up in value.